Sensex to hit 21000 before next Diwali

Sensex to hit 21000 before next Diwali?
Published on Fri, Oct 16, 2009 at 20:01 , Updated at Sat, Oct 17, 2009 at 09:43 Source : CNBC-TV18
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In a discussion with CNBC-TV18, market experts Dipan Mehta and Ajit Dayal of Quantum Advisors spoke on the year that was — from last Diwali to this one. And how they see markets, stocks and sectors panning out from hereon.
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“Last Diwali, the market was like at around 8,000 levels, so we have doubled in the last one year,” said Dayal. “Next Diwali, probably, the market will go up to about 21,000 or so by June-July 2010 in our view.” Dayal added that even as he was underweight on banking, a positive credit policy by the Reserve Bank of India (RBI) in October could trigger a fresh run-up in those stocks ahead. He was also positive on the aviation sector with a caveat: “A lot depends on the prices of aviation turbine fuel (ATF) and other stuff but the fundamentals of the sector look good only because the companies are buying less airplanes right now and demand could pick up.”
“The markets have run up considerably and valuations are getting stretched,” said a visibly cautious Dipan Mehta, member of the Bombay Stock Exchange (BSE). “Unless we see a sharp uptick in earnings, it’s going to be extremely difficult to justify the markets trading at significantly higher levels than this.”
Much of the liquidity in the system was being absorbed by fund raising by Indian companies, he said, and added that investors must be cautious at current levels: “Genuine long-term money and deep-pocket investors are at least staying on the sidelines because the valuations are such that there is hardly any margin of safety at this point of time